Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/204568
Authors: 
Oechssler, Joerg
Reischmann, Andreas
Sofianos, Andis
Year of Publication: 
2019
Series/Report no.: 
WZB Discussion Paper SP II 2019-209
Abstract: 
We present a new and simple mechanism for repeated public good environments. In the Conditional Contribution Mechanism (CCM), agents send two message of the form, "I am willing to contribute x units to the public good if in total y units are contributed." This mechanism offers agents risk-free strategies, which we call unexploitable. We prove that if agents choose unexploitable messages in a Better Response Dynamics model, all stable outcomes of the CCM are Pareto efficient. We conduct a laboratory experiment to investigate whether observed behavior is consistent with this prediction. In the complete information case we find that indeed almost 80% of outcomes are Pareto optimal. Furthermore, comparison treatments with the Voluntary Contribution Mechanism show that the CCM leads to significantly higher contribution rates. Even under incomplete information, contributions are fairly high and do not deteriorate over time.
Subjects: 
Experimental Economics
Public Goods
Mechanism Design
Better Response Dynamics
JEL: 
C72
C92
D82
H41
Document Type: 
Working Paper

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